Page 232 - DMGT407Corporate and Business Laws

Unit 9: Memorandum of Association

Notes
Example: The name ‘Universal Engineering Company Pvt. Ltd.’ will not be allowed if it
is to operate only as a small scale unit with limited range of product and financial resources.
12. A name for a company, which suggests a business, which is not proposed to be undertaken
by it, shall be considered to be undesirable.

13. A proposed name, which is the exact Hindi translation of the name of an existing company
will not be allowed.
14. Further, if a name of the proposed company falls within the categories mentioned below,
then it shall not be allowed. These are:
(a) If it is not in consonance with the proper objects of the company, as set out in its
memorandum of association.
(b) If it includes any word or words which are offensive to any section of the public.
(c) If the name is only a general one, like Cotton Textile Mills Limited or Y2K Ltd.
(d) If the proposed name has a close phonetic resemblance to the name of a company in
existence, for example, JK Industries Limited and Jay Kay Industries Ltd.
(e) If it is different from the name/names of the existing company/companies only to
the extent of having the name of place within brackets before the word ‘Limited’,
then it shall not be allowed.

Example: Indian Press (Delhi) Limited, should not be allowed in view of the existence of
the company named ‘Indian Press Ltd’.

Self Assessment

State whether the following statements are true or false:
12. The words National, Union, Central, President, Rashtrapati, etc., can be used as a part of
the name of a new company.

13. If the name is identical with or too nearly resembles the name by which a company is
already registered then such names are considered undesirable for a new company.
14. A name for a company, which suggests a business, which is not proposed to be undertaken
by it, shall be considered to be desirable.
15. A proposed name, which is the exact Hindi translation of the name of an existing company
will be allowed.

9.5 Summary

The memorandum serves a two-fold purpose. It enables shareholders, creditors and all
those who deal with the company to know what its powers are and what is the range of its
activities.

The memorandum is to be printed, divided into paragraphs, numbered consecutively and
signed by at least seven persons (two in case of private company) in the presence of at least
one witness.

The objects clause defines the objects of the company and indicates the sphere of its activities.
Liability clause states the nature of liability of the members.

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